Thursday 25 June 2020 11:41 am

Mitie snaps up Interserve facilities arm to create outsourcing giant

Mitie will buy the facilities management arm of rival outsourcer Interserve for £271m, the company announced today, creating a new business with nearly 80,000 employees.

The move will make the company the UK’s largest facilities management group, and see Mitie increase its interests in the country’s lucrative outsourcing industry.

Read more: Mitie unlikely to pay dividend as it cuts costs

The acquisition, which was confirmed this morning by the firm, was first reported last night by Sky News.

In order to fund the deal in light of the coronavirus crisis, Mitie also said it had launched a £201m rights issue.

Chief executive Phil Bentley said: “This will be a transformative acquisition, expanding the scale and footprint of our business to create the UK’s largest facilities management company and accelerate the delivery of Mitie’s long-term technology-led, vision”.

The deal comes with the sector under even tighter scrutiny than ever over the government’s reliance on such firms to provide essential services.

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Mitie and Interserve have been closely involved with the development of the NHS’ emergency Nightingale hospitals, while rival Serco has faced criticism for its role in the government’s track and trace system.

The collapse of outsourcing giant Carillion in 2018 has led to intense scrutiny of the decision to let such contracts to firms operating on tiny margins.

Alongside the announcement, Mitie also released its full-year results, which showed that the firm had been more resilient to coronavirus than previously expected.

Despite the lockdown restrictions, revenue in April and May fell just 12 per cent to £301.4m.

However, the board said the firm would cancel its dividend for the year due to the need to preserve cash in light of the crisis.

Bentley said: “In adversity, we have seen character, bravery, resilience, determination – and opportunity. 

Read more: Outsourcing giants to discuss contracts reform with Whitehall officials

“I have been incredibly proud of how our business has responded to the Covid-19 crisis. We have 37,500 frontline workers keeping the UK safe and operational whether in hospitals, supermarkets or, sites of national security, or keeping offices, transport hubs or manufacturing plants open.

“Mitie has been proud to support NHS Nightingale hospitals and Covid-19 testing centres around the UK. Our employees are our frontline heroes and I am humbled by all they do”.